Treasury sends a strong message on tax havens: Oxfam

The Australian Government has sent a strong message to corporations that they must pay their fair share of tax and avoid using other countries as tax havens, international aid agency Oxfam Australia said today.

Assistant Treasurer David Bradbury this week announced a specialist reference group to look at the taxation of multinational enterprises in Australia. The group will advise the Treasury on a scoping paper to be completed by mid 2013.

An estimated USD 3.1 trillion of tax, equivalent to 5.1 per cent of global GDP, is illegally evaded each year — including by multinationals in various sectors.

While the use of tax havens by companies like Starbucks, Google, Apple and eBay has caused outrage in industrialised countries, many developing countries rich in natural resources are missing out on significant income because of clever accounting by mining, oil and gas companies.

For example, trade-related tax dodging means developing countries are missing out on an estimated $160 billion each year, which represents almost twice the amount they receive in international aid.[i]

Oxfam Australia mining spokesperson Serena Lillywhite, who is a member of the new reference group, said all Australian companies had a responsibility to pay their fair share of tax, regardless of where they do business.

“Corporate responsibility starts with paying tax. Strengthened international cooperation on taxation regulation will help combat corruption, improve transparency and ultimately address poverty and inequality through better use of taxation revenue,” she said.

Ms Lillywhite said hundreds of Australian mining companies are active overseas, many with operations, subsidiaries and intermediaries in countries with weak governance and minimal tax regimes.

She said in some cases, countries rich in resources – but prone to poverty and corruption – are pressured into offering tax incentives to attract foreign investment, and end up missing out on much needed revenues for essential services such as hospitals, schools and basic infrastructure.

“We welcome the Government’s move to strengthen its work on taxation and multinationals.